MS. MITCHELL: Thank you for being with us. We now learn that Iran has turned 16 al-Qaida fighters over to Saudi Arabia. Are they in prison? Are they incarcerated?

MR. AL-JUBEIR: Yes. We're interrogating them. A number of them are children, some of them are women, so they may not have been directly involved in the fighting, but the Iranians have been cooperating with us. They've handed them over to us. They've handed over a number of others to other Arab countries.

MS. MITCHELL: Will you turn them over to the United States? Should they now be brought to Guantanamo base with the other al-Qaida fighters and be interrogated by our people?

MR. AL-JUBEIR: We are interrogating them in Saudi Arabia. We are sharing all of that with the United States. Those that deserve punishment will be punished, and I ensure you that punishment will be severe in Saudi Arabia.

MS. MITCHELL: Well, in the past, there have been disputes between the United States and Saudi Arabia about interrogations after the Khobar towers bombing incident. Will our FBI officials have full access to these people?

MR. AL-JUBEIR: I think the stories about conflicts in terms of the Khobar bombing suspects were vastly overblown. It became a political football in Washington. If you ask the FBI today, I think that they will not hesitate to tell you that Saudi Arabia has been very cooperative on the investigation about Khobar, as well as in the war on terrorism.

MS. MITCHELL: Well, this does come at a critical time in U.S.-Saudi relations.

MR. AL-JUBEIR: Yeah.

MS. MITCHELL: There has been this report. We have it here. This was the report by someone from Rand to a top Pentagon advisory group, solicited by Richard Pearl, who's very close to the vice president, to the Defense secretary. And let's take a look at some of the things that this report said. It said, for instance: "In the Arab world, violence is not a continuation of politics by other means-violence is politics, politics is violence. The Saudis are active at every level of the terror chain, from planners to financiers, from cadre to foot-soldier, from ideologist to cheerleader. Saudi Arabia supports our enemies and attacks our allies." What is your response to this?

MR. AL-JUBEIR: It's shocking. It's pure fiction. It's outrageous. The person who prepared the study is not an analyst on the Middle East. I think the closest he's ever been to Saudi Arabia is to go into a gas station to put gas in his car. Rand has disassociated itself from this study. The secretary of Defense has, the president has. What is shocking to us is how somebody as lightweight and as flaky as this on the Middle East can be allowed to make a presentation before a board as distinguished as the one that...

MS. MITCHELL: Inside the Pentagon.

MR. AL-JUBEIR: Yes, and...

MS. MITCHELL: This was at the highest level, because this policy board has been actively engaged in our approaching policy toward Iraq.

MR. AL-JUBEIR: Absolutely. And I think somebody should ask some serious questions: Why was this particular person brought to brief the board and who was responsible for it? And is this good for American policy or not?

MS. MITCHELL: Well, is the administration trying to have it both ways? Disassociate themselves from it while Secretary Rumsfeld did say we do have problems and differences with Saudi Arabia on several points while at the same time it's out there. It's now part of the debate here in the United States.

MR. AL-JUBEIR: Yes, I think--and people should look at the issues seriously between us. We are countries that have vastly different cultures, but we have very similar values. And we should engage each other, talk with each other, work with each other.

MS. MITCHELL: Well, let's take a further look at this Rand study, because one of the things it went on to say was that if Saudi Arabia does not stop all funding of fundamentalist mosques and schools, that we should, in fact, take action. It said: "If you don't stop anti-American and anti-Israeli rhetoric, or else" - this is what the study said we should do. We should target "What the House of Saud holds dear can be targeted: Oil: the oil fields are defended by U.S. forces, and located in a mostly Shiite area. Money: the Kingdom is in dire financial straits, its valuable assets invested in dollars, largely in the U.S. The Holy Places: let it be known that alternatives are being canvassed."

MR. AL-JUBEIR: That's what I find so shocking, Andrea. The person should have been a writer of fiction. He doesn't know the first thing about Saudi Arabia. And this report has no underpinnings at all in terms of research or analysis. These are his personal views, yeah.

MS. MITCHELL: Now, my own research with U.S. officials confirms that $250 million has been raised by the Saudis in the past two years for Palestinian causes, including U.S. officials say - and you yourself acknowledged - the families of martyrs, suicide bombers, and for money that goes indirectly in grants to Hamas.

MR. AL-JUBEIR: I think I would take...

MS. MITCHELL: Hamas is claiming responsibility for the bombing at Hebrew University.

MR. AL-JUBEIR: ...issue with this. We provide money to the Palestinians through international relief organizations, the United Nations organizations, the International Red Cross, the International Red Crescent. The objective is to put food on their table and medicine in their pharmacies. You know, if...

MS. MITCHELL: It's also money raised through the Internet...

MR. AL-JUBEIR: ...but we do not provide money to Palestinian suicide bombers. We are against it. Our chief religious goal is against it.

MS. MITCHELL: To their families? To their survivors?

MR. AL-JUBEIR: We do not give it to their families as a response to their son or daughter blowing themselves up. We give it to every Palestinian, irrespective of what their background is.

Now, having said that, is there Saudi money that can conceivably be going to evil-doers? Of course there is, just like there are American money that goes to evil-doers. But we have put in place financial control mechanisms. We have worked with our charities. We have purged evil-doers from the charities. We handed names to the United Nations. Our charities have shut down offices that they had in Bosnia and Somalia and Pakistan, which were suspected in terms of being involved with evil-doers. And we will continue to do so. But to level a charge to say Saudi Arabia supports terrorism, absolutely nonsense.

MS. MITCHELL: Well, let's talk about another big point of...

MR. AL-JUBEIR: Yes.

MS. MITCHELL: ...contention between your government and ours, and that is Iraq. The president said this weekend that Saddam Hussein is an enemy until proven otherwise. Do you agree?

MR. AL-JUBEIR: Well, he invaded Kuwait. He agreed to U.N. resolutions. He violated the terms of those resolutions. He violated the terms of agreements that he signed in terms of weapons of mass destruction.

MS. MITCHELL: But if that is the case, then why did Prince Saud al Faisal say this week - and let me show you the graphic - that: "Saudi Arabia has made clear to Washington - publicly and privately - that the U.S. military will not be allowed to use the kingdom's soil in any way for an attack on Iraq, Foreign Minister Prince Saud said Wednesday. "We have told them we don't (want) them to use Saudi grounds' for any attack on Iraq, he said."

MR. AL-JUBEIR: Because our view with regards to Iraq is that, it's an arms control issue. We should negotiate to put the inspectors back into Iraq, so they can dismantle Iraq's weapons of mass destruction program, if they have any, and if they don't have any, give them a clean bill of health. We believe...

MS. MITCHELL: Kofi Annan says that the inspections offer from Saddam Hussein has too many strings attached. It is not a clear-cut offer yet.

MR. AL-JUBEIR: So we should keep working on the offer and we should make it clear-cut and we should make it acceptable. But we believe that this rhetoric about going to war is overblown, and we believe that trying to push America or the world into war with Iraq is counterproductive, would have grave consequences for American interests in the region, as well as the interests of your friends and allies. And I think it's not surprising that there is no country in the world that I know of that has publicly supported the U.S. on this issue.

MS. MITCHELL: Well, let's take a look at what Vice President Cheney had to say about sending weapons inspectors back into Iraq:

(Videotape, August 7, 2002):

VICE PRES. CHENEY: Even if you had the return of inspectors, I'm not sure they would be able to do enough to be able to guarantee us and our friends in the region that he had, in fact, complied. He's gotten very good at denial and deception.

(End videotape)

MS. MITCHELL: Isn't that too much of a risk? And if we can't count on you, Saudi Arabia, our closest ally, to help us when and if the time comes to attack Iraq, whom can we count on?

MR. AL-JUBEIR: Well, we have said all along that this is an arms control issue. The inspectors have to come back. Saddam has to comply with the U.N. resolutions, and if he doesn't comply, we'll consult with the international community and with the United Nations and we'll see what the next steps are. We should go through a process. We haven't even begun this process.

MS. MITCHELL: So there's still a possibility that Saudi Arabia would permit U.S. basing...

MR. AL-JUBEIR: I think...

MS. MITCHELL: .. in Saudi Arabia if we have exhausted the diplomatic remedies?

MR. AL-JUBEIR: Let's go through the remedies. Let's go exhaust the remedies. Let's get legal sanctions. Let's see what happens. We feel fairly confident that the Iraqis will go along with allowing the inspectors back in and then the objective will have been achieved without the use of force.

MS. MITCHELL: Let's talk about another point of contention in the Middle East. The president's policy, stated policy, is that now we should move toward the possibility of a Palestinian state within three years. Yet, this is what the Defense secretary, Donald Rumsfeld, had to say about a Palestinian state earlier this week:

(Videotape, August 6, 2002):

SEC'Y DONALD RUMSFELD: My feeling about the so-called occupied territories are that there was a war. Israel urged neighboring countries not to get involved in it, once it started. They all jumped in and they lost a lot of real estate to Israel because Israel prevailed in that conflict.

(End videotape)

MS. MITCHELL: Is that the deal? Israel won fair and square and now can keep the occupied territories?

MR. AL-JUBEIR: I think the whole world takes issue with that. It's very clear that the occupied territories are occupied territories and have to be returned to the Palestinians and the Syrians, just as the Egyptian territories were returned to Egypt.

MS. MITCHELL: How can you expect Israel to participate in security discussions again after the Hebrew University bombing?

MR. AL-JUBEIR: I think that we have to look beyond the violence. We have to look at the end result. There will be violence as we go through the process. Anyone who says it will not continue is not being realistic. We have to redouble our efforts in spite of it in order to find a final solution. We all agree what the final solution looks like in the settlement. It's withdrawal from the territories in exchange for peace and normal relations, and let's roll up our sleeves and work in that direction.

MS. MITCHELL: Would your country tolerate an explosion killing students at one of your universities and sit down at the same time and negotiate a settlement with the people who had sponsored that terror?

MR. AL-JUBEIR: The British did it with the Irish and we had an agreement. The Israelis and the Palestinians need to work it out. We are not in that position. I cannot comment on this because we don't occupy another people against their will, but the Israelis do, and there has to be a way out of this. And the only way out of it is by agreeing to withdrawal, and putting in place security mechanisms that will ensure security for both Israelis and Palestinians.